Entropy is posting this Watchdog update on behalf of the reviewing committee.
Since the launch of the Watchdog program, 29 reports have been submitted. This influx was higher than expected, but nearly all of the instances are related to non-active programs. While it is perhaps premature to draw strong conclusions since the Watchdog has only been live for a month, the cases so far provide a point of evidence that recent DAO programs have been able to incorporate lessons learned from previous mistakes.
The review committee composed of the Arbitrum Foundation, Entropy Advisors, and SeedGov have begun investigating the matters and meet weekly to evaluate the cases. Individuals that submit reports of misuse, should expect at a minimum several weeks for a turnaround time as the committee verifies the onchain activity and in some cases reaches out to accused parties for clarification.
Based on the first batch of reports, the committee has identified a few program parameters that need updates. First, we are noticing that there are a few reports that should be considered medium/high severity based on the actions of the accused team, but the amount of ARB involved in the case is relatively low, which is leading to instances where the fixed reward exceeds the actual amount of misuse identified. As stated in the Watchdog proposal, the reviewing committee reserves the right to update the reward structure; therefore, moving forward the base ARB payout reward for valid reports will be the following:
- Low: 1,000 ARB (no change)
- Medium: 5,000 ARB (reduced from 10,000 ARB)
- High; 10,000 ARB (reduced from 30,000 ARB)
At the same time, the share of recovered funds granted to watchers will increase from 5% to 10%. The USD caps applying to recovered assets will stay the same. We believe this structure better aligns with the size and complexity of reports we are seeing thus far. These adjustments take effect immediately and will apply to reports submitted after the date and time of this post, ~4 pm UTC October 14th, 2025. Any reports submitted prior to this date will be subject to the previous reward structure.
So far, three cases have resulted in funds being returned to the DAO totaling 78,320 ARB, and while we don’t believe the program should be measured by total recovered funds, it is an early sign that it is functioning as intended. In each case, the recovered asset was ARB so it has been put towards refilling the Watchdog budget. The Watchdog proposal calls for recovered assets to be returned to the DAO treasury; however, a timeframe is not specified. The reviewing committee believes the best course of action is for any excess ARB above the initial 400k ARB budget to be returned at the 6-month retrospective mark or when the program is handed over to OpCo. This would ensure the Watchdog remains sufficiently funded in the event numerous high-severity cases are reported.
Additionally, the proposal was written before the establishment of the ATMC. In the event non-ARB assets like USDC are recovered, the reviewing committee believes it is more prudent to send these directly to the treasury management portfolio so that they can be quickly utilized rather than be sent back to the treasury to sit idle and have to be activated through an additional onchain vote. At this time, non-ARB assets have not been recovered, so the reviewing committee will revisit the topic when necessary.
The committee would also like to add the following clarifications:
- Instances of misuse that have already been disclosed in the Arbitrum governance forum will not be considered valid unless there is material new evidence presented.
- We recognize that due to cases not being made public, duplicate reports can occur. In a similar manner as above, the committee’s approach to an instance being reported multiple times is that only the individual who reported the instance first will be eligible for the Watchdog bounty unless the newer submissions provide new material evidence or provide additional assistance to the reviewing committee by being much more thorough in their analysis. At the discretion of the committee, we may split the Watchdog bounty or reward both/all individuals who submitted the report depending on the circumstances surrounding the instance.
Lastly, as a reminder to those submitting cases to the Watchdog, it is very important to save your login receipt after submitting a case. This is the only manner in which you will be able to log back in to the Watchdog portal to view updates. As the committee works through reports, we have been leaving next steps as a comment.
Thank you to those who have submitted instances of misuse so far. The reviewing committee will continue to provide periodic updates to the DAO as necessary.